Tips Choosing Home Insurance In Indonesia and How to Calculate Premiums
The home is one of the primary needs that must be satisfied. However, house prices continue to increase every year. With high prices and hard to come by, some even need to make payments for tens or decades.
So there must be protection to protect it, such as registering home insurance. If the function of the house is to protect the occupants, then the occupants must also protect the house and the property in which they live.
Owning a home is not only about aesthetics but of course you also have to consider the protection of your home. Although residential insurance is not as popular as life insurance.
In fact, not many people realize the importance of having home insurance even though home protection has the same benefits as life insurance, especially considering that housing is a primary need.
Nobody knows about the future. Of course everyone wants life to go well. To be calmer for the future, one of them is to have insurance that includes home insurance.
Tips Choosing Home Insurance In Indonesia and How to Calculate Premiums
Especially if your home is located in a location prone to flooding, mudslides, or other disasters, insurance can be an interesting consideration worth discussing with your family.
What is Residential Home Insurance?
Home insurance aims to provide maximum protection to occupants against the different possible risks that can be caused to the detriment of their finances.
These risks range from fire, to damage from natural disasters, to loss from theft. The insurance can be adjusted to the needs of potential customers. The registration process is also quite easy and fast.
Residential Home Insurance Benefits.
The main benefit of home insurance is that it provides financial compensation for loss or damage due to the risks assumed by this type of residential home insurance.
So insurance benefits are only received when a disaster strikes. If the house is in a flood-prone area, near an airport, with many tall trees, or near a factory, this insurance is very helpful when you experience a disaster. As for some of the benefits that can be felt from having insurance, namely:
a. Safeguard home values
An insured home has a more secure value than an uninsured home. This is because the value of the house will not decrease when it is sold, for example, in a disaster or natural disaster.
b. Reduce risk of loss when disaster strikes
When there are unexpected natural disasters like earthquakes, landslides, hurricanes, or floods, there are some risks that cannot be avoided. With insurance, financial losses can be reduced.
C. Theft or robbery risk guarantee
Theft or theft can happen and this is definitely detrimental. Not just property loss, but there could be other losses, such as damage to broken doors or windows. If you have insurance, then the claim will be liquid to replace the damage or loss.
d. Reducing Expenses
When disaster strikes, of course, expenses will increase. For example, in the rainy season there are floods. Money is needed to repair the house and buy broken things. However, if you are insured, the risk of large expenses can be reduced.
e. Conditions to present a loan
Several financial institutions provide conditions for applying for a loan in the form of home insurance. When you have insurance, loan funds can be disbursed quickly as long as other terms and conditions are met.
Types of Home Insurance
There are two types of home insurance, namely Residential Houses, Indonesian Standard Fire Insurance (PSAKI) Policies, and Property All Risk or Industrial All Risk. Choose insurance based on your needs. In order not to make the wrong decision, here is the full review:
a. All Patrimonial Risk or All Industrial Risk
The type of all risk or industrial all risk property insurance is home insurance which is nameless perils. Nameless Risks is a complete guarantee of protection against the risks that occur to the assets and interests insured.
Insurance gives exceptions to things that are not insured, such as war, terrorism, nuclear, radioactivity. Generally, this type of home insurance is of a non-industrial nature, such as offices, hospitals, schools, etc. While specialty insurance is generally used for industrial buildings like factories, the type of insurance used is all-risk industry. The following are the risks borne:
- PSAKI fire risk
- Riots, misconduct and strikes
- robbery or theft
- The house was hit by a vehicle.
PSAKI insurance is protection provided as a service form of a fire insurance policy. This insurance has the property of protecting houses or other types of buildings from losses due to risks caused by fire and the like. Risk is the loss of property caused by:
- Fire due to negligence of the insured, fire derived from a short circuit or from an element
- Lightning strike causing a fire
- Plane crash causing fire
- Explosions such as broken pipes, boilers, by chemical reactions and others
- Smoke appearing due to fire
The thing to keep in mind is that this insurance only covers the loss of the house and the property in it due to fire. So if a flood or theft is not covered by this type of insurance.
Tips for choosing home insurance in Indonesia
The best insurance is the one that has benefits according to your needs and comes from a reliable company. Before deciding which home insurance you should choose for your protection, keep the following points in mind:
1. A trusted insurance company
Choose a reputable home insurance product that is registered, authorized and supervised by the Financial Services Authority. This is to minimize the risk of fraud that may occur. Other than that, look for an insurance company that is known for its good service, so even when you want to claim it won’t be difficult. Don’t forget to find out the credibility and experience of the insurance company.
2. Pay attention to the type of home insurance on the product
As explained above, there are two types of home insurance, all-risk property and fire. There you need to have different insurances that adapt to your needs.
3. Please read the policy carefully
When you get an insurance policy, you should read the policy carefully. Usually, you will have time to study the policy or a free lock-in period that lasts up to 14 days. During these 2 weeks, you can learn more about the police and see the benefits of risk exclusion according to your needs.
4. Ensure that the benefits provided are sufficient
You can see this through the sum insured and/or the nominal compensation established in the insurance policy. After that, compare the sum insured with the estimated price of building a house if a risk occurs. If your house is large, the need for insurance will be greater, as well as the insured amount you need will be greater.
How to Calculate Residential Home Insurance Premiums
Some people hesitate to purchase home insurance because they believe that the premium payment is not in accordance with the agreement. Even if the client does not understand how to calculate insurance premiums. So, so you don’t get me wrong, you must first learn how to calculate it.
a. construction bonus
For used buildings, just counting the building, then you must know the insured value of the house. An easy way to calculate the sum insured is to know the area of the building and the costs required to build the house.
Example:
The house to be insured has an area of 200 m2 with a cost of Rp 10 million/m2 to build it. With this value, the nominal sum insured (UP) required is:
Construction value: IDR 10 million/m2 x 200 m2 = IDR 2 billion
After knowing the value of the building, you can calculate the home insurance premium, that is, the prime rate charged. For example, insurance company A’s premium rate is 0.2194 percent. So, the premium that must be paid with a hedge value of IDR 2 billion is as follows:
Insurance premium: IDR 2,000 million x 0.2194% = IDR 4,388,000
In other words, the annual premium for a home insurance with an area of 200 m2 from insurance company A is IDR 4,388,000.
b. Construction and Premium Content
Building and contents insurance requires coverage similar to building insurance. The formula to calculate it is the following:
For example, with the same building coverage as in the previous example, which is Rs 2000 crore + building content of Rs 500 crore. Then, the annual premium to be paid is the following:
Building value + house contents: IDR 2 billion + IDR 500 million = IDR 2.5 billion
As in the previous example, Insurance Company A’s premium rate is 0.2194 percent. So, the premium to be paid is the following:
Insurance premiums: IDR 2.5 billion x 0.2194% = IDR 5,485,000
In conclusion, the annual insurance premium for construction objects and contents of a 200 m2 house from insurance company A is IDR 5,485,000.
home fire insurance
Fire is one of those calamities that can destroy all property in an instant. Based on the Indonesian Standard Fire Insurance Policy (PSAKI), it provides guarantees for FLEXAS (Fire, Lightning, Explosion, Aircraft Downing and Smoke), namely:
- The risk of fire (Fire) is the risk of damage to the home due to carelessness of the insured, short circuit, propagation of fire and other objects.
- Risk of damage to the home by lightning (lightning) causing direct damage, including the guarantee of electrical machines, electronic or electrical equipment and electrical installations that are burned by lightning
- Risk of damage to the home due to an explosion from a property guaranteed by this policy
- The risk of damage to the house due to falling aircraft (aircraft crash) will fall on the house and the goods guaranteed by the policy
- The risk of damage to the home by smoke (smoke) comes from the fire of the property guaranteed by the policy.
How residential home insurance works
Before you decide to sign up for insurance, you first need to know how it works. For example, Mr. Welly has a house with a construction area of 300 m2 and the insured value of the house is IDR 1,000,000,000. The sum insured can be obtained by adding:
- Calculation of the cost of reconstruction.
- Assets that are registered and accounted for in insurance
Example:
Reconstruction costs = 300 m2 x IDR 5,000,000 per meter = IDR 1,500,000,000 Registered assets = IDR 500,000,000 Total = IDR 1,500,000,000 + IDR 500,000,000 = IDR 2,000,000,000
After obtaining the insured sum, the premium to be paid is = the residential home insurance premium rate x the insured sum
Example:
Residential home insurance premium rate = 0.15% The sum insured = IDR 2,000,000,000 Insurance premium = 0.15% x IDR 2,000,000,000 = IDR 3,000,000
What must be taken into account is that the premium rate is adjusted to each insurance company and depends on the use that is going to be given to the building, city, location and others.
The best home insurance in Indonesia
There are now many insurance companies that offer protection for homes or other major buildings. To protect against incurring too great a loss when experiencing a disaster, the following are recommendations for insurance companies to choose from:
a. Insurance Sinar More
Seguros Sinar Mas has a home insurance product, the simas ahorro casa+. This home insurance product offers comprehensive coverage from losses caused by fire to natural disasters. Under this insurance, Sinarmas will grant compensation of 100% of the insured sum and additional guarantees up to a certain limit. Other than that, Sinarmas home insurance also provides compensation for the occupants, including security guards and helpers. Sinar Mas Insurance also has a limit on the sum insured, even if it exceeds Rs 3 billion.
b. Allianz Insurance
The Allianz insurance product is Allianz my home with fairly complete protection for its clients. Insurance users can choose two types of policies provided, namely Rumahku Houseowner for home protection, Rumahku Plus Householder for home protection and furniture for the electronic goods in it.
C. ACA insurance
The Aceh insurance protection guarantee is also quite comprehensive, covering damage to assets from lightning strikes to plane crashes. This insurance premium is 0.08% of the total sum insured. However, the property that can be insured is only residential construction where most of the materials are made of non-combustible materials.
d. AXA Insurance
This insurance offers protection against the risk of occupation that guarantees the building including the equipment and tools found in it. Aside from that, the additional premium can also cover the cost of valuables outside the home.
By having protection for your home, of course you will live a safer and more comfortable life. The existence of a house can bring benefits, one of which is as business capital. Now, you can turn properties like houses into business capital with Danamas.
Big limit up to IDR 2 billion and of course safe because Danamas is an OJK authorized fintech loan which is also registered with AFPI and KOMINFO.